Pakistan Stock Exchange down but not out

DAWN.com

Late last month, some believers slaughtered a couple of goats at the altar of the Pakistan Stock Exchange to drive away evil spirits that have come to haunt what, only a year ago, stood out as the best performing market in Asia, giving out a mouth-watering return of 44pc.

The celebrations continued well into 2017. But as all good things come to an end, so did the investors’ honeymoon with the market.

On May 25, the KSE-100 index hit the intra-day all-time high at 53,127 points. To the surprise of brokers and analysts who were espousing the index would close at above 60,000 points by the winter of 2017, it was a chilling moment when the market started to melt.

Almost four months on, the PSX has not found a foothold. By the middle of last week, the benchmark KSE-100 index stood at 42,310 points, representing a decline of 10,817 points or 20pc. From the closing on Dec 31, 2016 at 47,807 points, the Index has lost 5,497 points, representing the year-to-date negative return of 12pc.As the paper value of corporate Pakistan, signifying market capitalisation of all 561 listed companies combined, lost Rs1.04 trillion — sliding from peak of Rs10.44tr to Rs8.88tr — small investors, particularly, have been ruined.

Almost four months on, the PSX has not found a foothold. But for all that, in the PSX boardroom members continue to exude confidence

Things started to fall apart after an unkind federal budget for the stock market, which piled more taxes and provided few incentives. The deteriorating balance of payments situation and the souring of expectations of immense foreign flows following Pakistan’s MSCI Index reclassification to Emerging Market from Frontier Market were major setbacks.

But the crowning blow was the apparent loss of credibility of the ruling house of Sharif, which gave rise to prolonged ‘uncertainty’. There is a saying that, for the stock market, uncertainty is worse than bad news. Such uncertainty still plagues the market, forcing investors, both institutional and individuals, to stay on the sidelines.

But for all that, in the PSX boardroom members continue to exude confidence.

The Chinese strategic investors — China Financial Futures Exchange Co.Ltd, Shanghai Stock Exchange and Shenzhen Stock Exchange — had bought 30pc or 320 million strategic shares of the PSX for Rs8.96bn, at a per share price of Rs28.

In the ongoing bear run, the stock price has receded to Rs20.24, denting Chinese investment by Rs2.48bn or 28pc. Does that worry the Chinese buyers? “Apparently not”, says Haroon Askari, managing director, PSX. He contends that the Chinese have made a long term strategic investment.

“They are here for the long haul and are keen to launch the derivative market with the ‘Exchange Traded Fund’ as the first product”, says Mr.Haroon. It may be followed by other initiatives streamlined in the SECP’s capital market development programme.

Cross border listing and effort to attract Chinese investors to the local bourse are being pursued.

But many analysts are not very optimistic on immediate market prospects: Says Zubair Ghulam Hussain, CEO at Insight Securities: “Keeping the economic and political picture in mind, we feel that the market may not see broad-based upward movement in the next few months.”

Yet, he said, selective opportunities in specific stocks/sectors could open up, stemming from (possible) currency depreciation; governments focus on control of imports and boosting exports and a likely positive policy rate adjustment.

According to Insight Securities, the KSE-100 index is currently trading at 2018 price-to-earnings multiple of 9 times, compared to average MSCI Emerging Market index forward price-to-earnings of 12 times, indicating a discount of 28.6 times.

Analysts at brokerage Next Capital lamented that while it took about nine months (Aug 31, 2016 to May 25) for the KSE-100 index to add approximately 13,000 points (33pc return), but in barely three months (May 25 to early this month), most of those gains (about 22pc) were washed away.

“This may resonate with the fact that excesses in one direction often leads to an excess in the opposite direction”, they admitted.

But market observers pin much of the blame for the free-fall of the stocks on mutual funds.

In May, the last month of the rally, funds had bought shares worth $47m. All of that helped to absorb foreign portfolio outflows. With a scintillating growth over the last decade, the assets under management (AUM) of the mutual funds industry have surged to Rs625 billion.

Equity funds outperformed, both in size and growth. At the end of May, the size of equity funds stood at Rs309bn, making a half of the entire mutual fund industry’s AUM.

But all that has changed. In the current bear run, funds have been the major sellers and perhaps the spoilers of the market. According to a big broker, mutual funds are currently sitting on a cash pile of Rs70bn, waiting for the stocks to bleed further before entering to buy at cheaper valuations.

“There is nothing wrong or illegal in this strategy”, argued a manager of one of the three largest equity funds in the market. “We are not here to support the market but to protect the interests and returns of our certificate holders”, he asserted.

Published in Dawn, The Business and Finance Weekly, September 18th, 2017

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#Khaadi Has FINALLY Responded To Those Allegations With Their Side Of The Story

ARY NEWS

Renowned clothing brand Khaadi on Monday issued a clarification regarding a social media campaign against the brand.

The brand which was under fire for allegedly mistreating and firing its workers is facing a boycott campaign on social media after rumours one of its workers attempted suicide after being fired.

In a short statement, the brand categorically confirmed  hat it has not terminated 32 of its employees and the story regarding apparent attempted suicide of a young female worker is baseless.

“We categorically confirm that Khaadi has NOT terminated 32 of its employees. Another malicious story being spread and linked to the above is of the apparent attempted suicide of a young female worker. Why anyone should spread this outright lie is beyond understanding, but this just goes to show how some vested interests will stop at nothing to premeditatedly plan to try and cause reputational harm to Khaadi,” said the statement issued by the brand.

The statement adds that Khaadi, being a responsible corporate citizen, has always endeavoured to maintain and adhere to the highest standards in all operations-which also includes following best practices with regard to its biggest assets, the brand’s employees.

The brand also appealed to all social media users not to share or spread news that is pure hearsay, or base your comments on speculative news, no matter shared by who, without fully knowing the facts yourself.

A number of social media activists started calling for boycott of Khaadi after video of protest by people claiming to be workers of the brand went viral on social media.

A hashtag #BoycottKhaadi is also trending on the Twitter with social media activists calling for the nationwide boycott of Khaadi.

Alibaba group set to enter Pakistan; signs first MoU

APP

Pakistan on Tuesday signed a Memorandum of Understanding with Alibaba Group Holdings Limited to promote country’s worldwide exports by Small and Medium Enterprises (SMEs) through e-commerce.

The agreement between Alibaba and Trade Development Authority of Pakistan (TDAP) was signed by Commerce Minister Khurram Dastgir and Michael Evans, President of Alibaba Group, and Douglas Feagin, Senior Vice President of Global Business of Ant Financial, on behalf of Alibaba, during the visit of Prime Minister Muhammad Nawaz Sharif to the headquarters of the company.

Alibaba Group’s Executive Chairman, Jack Ma and Prime Minister Nawaz Sharif witnessed the signing ceremony.

Under the terms of the MoU, Alibaba, Ant Financial, and TDAP agreed to foster growth of worldwide exports of products by small and medium sized enterprises (SMEs) in Pakistan through e-commerce.

Online and offline training programs for the SMEs would also be conducted by Alibaba in a bid to assist SMEs with on-boarding on to Alibaba’s platforms and optimizing exports through e-commerce.

TDAP will help identify suitable SMEs to participate in the training programs while Alibaba will be responsible for providing industry analysis to TDAP to assist them in their selection process.

In addition, Alibaba, Ant Financial and TDAP have agreed to promote the growth of financial services in Pakistan in areas such as mobile and online payment services.

The parties have also agreed to adopt cloud computing services to support the online and mobile e-commerce businesses of SMEs in Pakistan.

DAWN.com

Pakistan closely coordinating with China for planning, implementation of CPEC: Nawaz

DAWN.com
Prime Minister Nawaz Sharif  shakes hands with China's President Xi Jinping. —AFP
Prime Minister Nawaz Sharif shakes hands with China’s President Xi Jinping. —AFP

Prime Minister Nawaz Sharif said Pakistan strongly favours cooperation and synergetic partnerships across regions to ensure socio-economic development and prosperity.

He was speaking at the leaders’ roundtable on policy synergy in Beijing on Monday, Radio Pakistan reported.

“It is imperative that we appreciate the ‘Belt and Road’ initiative in its proper perspective of interconnected development. It is now turning into the centre of gravity for half of the world’s economies in Asia, Africa and Europe,” the prime minister was quoted as saying.

The premier said as part of the same initiative under China-Pakistan Economic Corridor (CPEC) banner, “we have made phenomenal progress in a short span of time through active participation in the areas of infrastructure, energy, industrial zones, and telecommunications”.

He, however, said four areas require more focus.

“First, overall progress should be reviewed as we all stand to benefit from early harvest projects. Second, we need more synergy in our development strategies both at the regional and international levels. Third, this initiative must continue to deliver “win-win” outcomes. Four, we should build on the solid foundations of One Belt One Road to make it a living, growing and organic partnership,” the premier was quoted as saying.

Nawaz said Pakistan is harmonising national development plans with CPEC project, closely coordinating with China for planning and implementation of CPEC and liaising with international financial institutions for policy alignment.

He called for expanding consensus for One Belt One Road, enhancing cooperation in development and implementation and prepare a blueprint and roadmap for long-term cooperation.

Speaking in the second session of the roundtable on ‘connectivity cooperation for interconnected development’, the premier said Pakistan is pursuing vision of a peaceful, inter-connected and prosperous neighbourhood with great determination.

“Rapid digitalisation and next generation connectivity are at the heart of our agenda for transforming into a knowledge-based economy,” he said.

The prime minister was of the view that CPEC is creating new supply and logistic chains, as well as manufacturing networks. “It has infused Pakistan’s economy with new vitality and dynamism.”

He said Gwadar Port, which is the pivot of CPEC, will link up East, West and South Asia. It will also reach out to African and European markets.

Core of the “One Belt-One Road” initiative is connectivity and long-term development, especially in developing countries, the premier concluded.

Samsung Electronics says Galaxy S8 pre-orders exceeded S7

Reuters

Pre-orders for Samsung Electronics Co Ltd’s flagship Galaxy S8 smartphone have exceeded those of its predecessor S7, mobile business chief Koh Dong-jin said on Thursday, suggesting many consumers were unfazed by last year’s Galaxy Note 7 fires.

The S8, which began sales in South Korea, the United States and Canada on April 21, will be central to the South Korean firm’s recovery from the swift withdrawal of the Note 7 phablet.

The new device has been well-received, and some investors and analysts said it could set a first-year sales record for the smartphone giant.

“It’s still a bit early, but initial response to the pre-orders that have begun at various places across the world have been better than expected,” Koh said at a media briefing.

The S8 will be the safest Galaxy smartphone to date due to safety measures implemented to avoid the battery failures that caused some Note 7s to spontaneously combust, he said.

Analysts expect Samsung to record its best-ever quarterly profit in April-June, buoyed by strong S8 sales and a memory chip market boom that is widely expected to deliver record revenue for the industry this year.

The new device, equipped with either 5.8-inch or 6.2-inch curved screens, sports the largest screens to date among all of Samsung’s flagship phones due to a redesign.

Koh also said the firm plans to use the S8 to try to recover in China, where Samsung has been out of the top five vendors in recent years due to heightened competition from local rivals such as Huawei Technologies Co Ltd.

He said Samsung will aim to regain market share in China even if it takes time, without elaborating on specific strategies.

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Yahoo accused of mismanaging fund for dissidents in China

AFP

A lawsuit accused Yahoo of breaking a financial promise it made to Chinese dissidents almost a decade ago as penance for helping the Chinese government find and jail other activists.

The complaint, filed Tuesday in a Washington, D.C., federal court by a group of Chinese dissidents, contends that Yahoo mismanaged a $17 million fund set up to provide financial aid to activists.

Embroiled in China

Yahoo created the human rights fund in 2007, days after U.S. legislators roasted the company for providing authorities with information that led to the imprisonment of two Chinese dissidents, Wang Xiaoning and Shi Tao.

The complaint alleges that Yahoo allowed Harry Wu, a now-deceased dissident from China, to spend about $13 million of the fund enriching himself and pursuing other projects tied to his interests.

Only $700,000 has been doled out to Chinese dissidents who had been imprisoned for expressing their opinions online, the reason Yahoo bankrolled the fund, according to the lawsuit.

Yahoo declined to comment.

The plaintiffs want Yahoo to replenish the fund and to pay unspecified damages. The suit arrives at a delicate time for Yahoo, which is preparing to sell its online operations to Verizon Communications for $4.5 billion.

Lectured by Congress

The unflattering portrait drawn in the lawsuit represents yet another blotch on Yahoo’s record in China. Yahoo’s role in fingering Wang and Shi subjected the Sunnyvale, California, company to withering criticism that culminated in Yahoo co-founder Jerry Yang being grilled during a Congressional hearing.

“While technologically and financially you are giants, morally you are pygmies,” Rep. Tom Lantos, a California Democrat, told Yang.

Two days later, Yahoo announced the $17 million fund as part of a settlement that ended lawsuits related to its role in the imprisonment of Wang and Shi. “We are committed to making sure our actions match our values around the world,” Yahoo vowed in a November 2017 statement announcing the fund.

Alleged mismanagement

The new lawsuit argues Yahoo instead used the fund as “window dressing” to help shield the company from further ridicule and resolve other lawsuits.

Meanwhile, Yahoo turned a “blind eye” to Wu’s reckless spending, even though company executives had been warned about the abuses as far back as 2010, according to the complaint.

Among other things, the complaint alleges that Wu paid himself and his wife more than $1 million, spent about $4 million buying real estate in Washington and more than $800,000 on his own legal bills, including a case alleging sexual harassment.

Wu, who spent 19 years in Chinese labor camps, died last year.

Dawn.com